The Psychology of Happiness: 13 Steps to a Better Life

We think we know what will make us happy, but we don’t. Many of us believe that money will make us happy, but it won’t. Except for the very poor, money cannot buy happiness. Instead of dreaming of vast wealth, we should dream of close friends and healthy bodies and meaningful work.

The psychology of happiness
Several years ago, James Montier, a “global equity strategist”, took a break from investing in order to publish a brief overview of existing research into the psychology of happiness [PDF]. Montier learned that happiness comprises three components:

About 50% of individual happiness comes from a genetic set point. That is, we’re each predisposed to a certain level of happiness. Some of us are just naturally more inclined to be cheery than others.

About 10% of our happiness is due to our circumstances. Our age, race, gender, personal history, and, yes, wealth, only make up about one-tenth of our happiness.

The remaining 40% of an individual’s happiness seems to be derived from intentional activity, from “discrete actions or practices that people can choose to do”.

If we have no control over our genetic “happy point”, and if we have little control over our circumstances, then it makes sense to focus on those things that we can do to make ourselves happy. According to Montier’s paper, these activities include sex, exercise, sleep, and close relationships.

What does not bring happiness? Money, and the pursuit of happiness for its own sake. “A vast array of individuals seriously over-rate the importance of money in making themselves, and others, happy,” Montier writes. “Study after study from psychology shows that money doesn’t equal happiness.”

The happiness paradox
Writing in The Washington Post last June, Shankar Vedantam described recent research into this subject. If the United States is generally wealthier than it was thirty or forty years ago, then why aren’t people happier? Economist Richard Easterlin of the University of Southern California believes that part of the problem is the hedonic treadmill: once we reach a certain level of wealth, we want more. We’re never satisfied. From Vedantam’s article:

Easterlin attributes the phenomenon of happiness levels not keeping pace with economic gains to the fact that people’s desires and expectations change along with their material fortunes. Where an American in 1970 may have once dreamed about owning a house, he or she might now dream of owning two. Where people once dreamed of buying a new car, they now dream of buying a luxury model.

“People are wedded to the idea that more money will bring them more happiness,” Easterlin said. “When they think of the effects of more money, they are failing to factor in the fact that when they get more money they are going to want even more money. When they get more money, they are going to want a bigger house. They never have enough money, but what they do is sacrifice their family life and health to get more money.”

The irony is that health and the quality of personal relationships are among the most potent predictors of whether people report they are happy — and they are often the two things people sacrifice in their pursuit of greater wealth.

Why aren’t rich people happier? Perhaps it’s because many of them are workaholics, because they’re more focused on money than on the things that would bring them joy. A brief companion piece to The Washington Post story notes that researchers have found that “being wealthy is often a powerful predictor that people spend less time doing pleasurable things, and more time doing compulsory things and feeling stressed.”

In general, rich people aren’t much happier than those of us in the middle class. Yes, money can buy happiness if it elevates you from poverty, but beyond that the benefits are minimal. So why do so many people believe that money will make things better?

Stumbling on happiness
In 2006, Harvard psychology professor Daniel Gilbert published Stumbling on Happiness, a book about our inability to predict what will really make us happy. The following is a 22-minute video of a presentation Gilbert made at TED 2004, in which he compresses his ideas into bite-sized chunks:

Gilbert says that because humans can plan for the future, we naturally want to structure our lives in such a way that we are happy, both now and later. But how do we know what will make us happy? We don’t. In fact, we’re surprisingly bad at predicting what will bring us joy. Gilbert asks:

Which future would you prefer? One in which you win the lottery? Or one in which you become paraplegic? Which would make you happier? [...] A year after losing their legs, and a year after winning the lotto, lottery winners and paraplegics are equally happy with their lives.

The problem is impact bias, the tendency to overestimate the “hedonic impact” of future events. Put another way, the things that we think will make us happy usually don’t make us as happy as we think they will. Winning the lottery isn’t a panacea. Having an affair with your hot new co-worker won’t be as thrilling as you imagine. And losing a leg isn’t the end of the world.

It turns out that humans are able to synthesize happiness. Many people look outside themselves for fulfillment; they expect to find it in things, or in relationships, or in large bank accounts. But true happiness comes from within. True happiness comes when we learn to be content with what we have.

13 steps to a better life
What does all this mean to you? If money won’t bring you happiness, what will? How can you stop making yourself miserable and start learning to love life? According to my research, these are the thirteen actions most likely to encourage happiness:

Don’t compare yourself to others. Financially, physically, and socially, comparing yourself to others is a trap. You will always have friends who have more money than you do, who can run faster than you can, who are more successful in their careers. Focus on your own life, on your own goals.

Foster close relationships. People with five or more close friends are more apt to describe themselves as happy than those with fewer.

Have sex. Sex, especially with someone you love, is consistently ranked as a top source of happiness. A long-term loving partnership goes hand-in-hand with this.

Get regular exercise. There’s a strong tie between physical health and happiness. Anyone who has experienced a prolonged injury or illness knows just how emotionally devastating it can be. Eat right, exercise, and take care of our body. (And read Get Fit Slowly!)

Obtain adequate sleep. Good sleep is an essential component of good health. When you’re not well-rested, your body and your mind do not operate at peak capacity. Your mood suffers. (Read more in my brief guide to better sleep.)

Set and pursue goals. I believe that the road to wealth is paved with goals. More than that, the road to happiness is paved with goals. Continued self-improvement makes life more fulfilling.

Find meaningful work. There are some who argue a job is just a job. I believe that fulfilling work is more than that — it’s a vocation. It can take decades to find the work you were meant to do. But when you find it, it can bring added meaning to your life.

Join a group. Those who are members of a group, like a church congregation, experience greater happiness. But the group doesn’t have to be religious. Join a book group. Meet others for a Saturday morning bike ride. Sit in at the knitting circle down at the yarn shop.

Don’t dwell on the past. I know a guy who beats himself up over mistakes he’s made before. Rather than concentrate on the present (or, better yet, on the future), he lets the past eat away at his happiness. Focus on the now.

Embrace routine. Research shows that although we believe we want variety and choice, we’re actually happier with limited options. It’s not that we want no choice at all, just that we don’t want to be overwhelmed. Routines help limit choices. They’re comfortable and familiar and, used judiciously, they can make us happy.

Practice moderation. Too much of a good thing is a bad thing. It’s okay to indulge yourself on occasion — just don’t let it get out of control. Addictions and compulsions can ruin lives.

Be grateful. It’s no accident that so many self-help books encourage readers to practice gratitude. When we regularly take time to be thankful for the things we have, we appreciate them more. We’re less likely to take them for granted, and less likely to become jealous of others.

Help others. Over and over again, studies have shown that altruism is one of the best ways to boost your happiness. Sure, volunteering at the local homeless shelter helps, but so too does just being nice in daily life.

Remember: True wealth is not about money. True wealth is about relationships, about good health, and about continued self-improvement.

The Happy Planet Index is “the first ever index to combine environmental impact with well-being to measure the environmental efficiency with which country by country, people live long and happy lives.”

Last month, we discussed whether it was more important to be rich or to be happy. “Money and happiness are not mutually exclusive,” many of you noted, and it’s true. You can have happiness and a big savings account. Or neither. It’s important to realize, however, that money is a less reliable source of happiness than what’s inside you.

Aaron, you make a good point, and in his book, Gilbert does a better job of exploring different concepts of happiness. One of the things he talks about is whether your concept of happiness is the same as mine. If all you’ve ever eaten is dirt, and you think you’re happy eating dirt, how do you really know that you’re happy? If you then taste chocolate cake, your happiness will decline because now you know dirt doesn’t taste as good.

On the other hand, who is to say that the happiness of dirt-eaters is any less than the happiness of cake eaters? It’s a tough question, and Gilbert explores it at length in Stumbling on Happiness.

“Many of us believe that money will make us happy, but it won’t. Except for the very poor, money cannot buy happiness.”

What money buys for both the poor and those living paycheque to paycheque (actually a pretty large segment of the population) is *security*.

People equate feeling safe with feeling happy or content. And having enough money to weather an illness, a job loss or a car accident without being evicted, having your utilities turned off, bouncing cheques, having to put off medical or dental care, etc. is very, very important.

That’s probably why being debt free feels so good and why several people think that the “happiness quotient” declines once they’re debt free and still accumulating money. The important part is getting to the point of being safe. Beyond that is nice but not as vital so the feeling of happiness or contentment is more fleeting.

Very thought provoking post J.D., many thanks. I have been witness recently to a marriage breakdown as a consequence of one partner’s wild spending and “hedonistic adaptation”. Even with a Porsche in the driveway and a Harley in the garage the chap is miserable still (and sadly can’t see why). The fact that he can’t afford either and is just making their financial situation worse just makes it harder to watch.

I think meaningful work is important. But I don’t think it has to come from your main paid employment. I enjoy my job, and on the whole, I find it meaningful, but I also get meaning from my blogging and from some voluntary activities that I do.

They are both work, in the sense that they are obligations, they require lots and lots of energy and they aren’t fun every minute of every day. They do contribute an immense amount of meaning to my life, and genuinely help me feel that I am making a difference, however small. This is something that’s important to me, whether I get paid for these activities or not.

Outstanding article. Thank you. I also enjoyed reading everyone’s replies. If ever the phrase “food for thought” were appropriate, this is it. What nurtures our soul? Philosophers, theologians, & psychologists have been wrestling with this subject from day one.

@Kevin – good question. “I am conflicted between learning to be happy with what I’ve got and being ambitious….I have a hard time accepting things as they are now (although I live a comfortable life). Does anyone else have this problem? Is it safe to say that everyone reading this blog has great ambitions, yet is ultimately seeking happiness?

I am very happy about the life I’ve been given. I am grateful for the life I have built for myself and grateful to all who helped me (parents, teachers, friends, loved ones) reach the point at which I am right now. I love my friends, I am grateful for my health, I am grateful for the state of mind that I am in – whereby I can make healthy choices for myself. I am happy about having the ability to be *mindful* and not live on autopilot.

But I am not satisfied. I am ambitious – I want for my company to entrench its relationships with current and future clients, I want to make more money next year, I want for my investments to grow, I want for my quality of life to improve even more.

But I don’t expect these things to make me *happy*.

My happiness is predicated on gratitude, mindfulness and appreciation. My ambition is predicated on enuring the situation that I am already in.

plonkee in 55 is right. A few years ago I started volunteering for http://www.ethicalfocus.org/ – a nice organization that is local, but has progressive goals for society, the planet, etc.
I not only gained a social community, but also have something to work towards beyond my own economic interests and entertainment.

I was going to comment yesterday, but realized that my comment was way too long
I think what’s missing in all the self help & personal finance discussion of ‘how to be happier’ is the fact that we each only focus on individual happiness, and collective or societal happiness goes entirely unconsidered…
What makes one person (or one small unit, say a family) much happier can often makes someone else unhappy…

JD – This is an excellent synopsis of the current thinking on happiness and money.

I am currently a master of applied positive psychology (MAPP) student at the University of Pennsylvania. My focus is on the nexus of happiness (well-being) and sustainable living. Obviously, money plays big in this relationship. If people recognize the fact that over-consumption will not bring happiness, it will significantly reduce the over-extraction of valuable natural resources.

I must say that your “13 steps to a better life” really nails the current findings in positive psychology. I strongly recommend to your readers that they MEMORIZE them.

Finally, there considerable contraversy in the field about the happiness set-point. Many positive psychologists do not believe that it is true. At best, people have a happiness “set-range” as opposed to a “set point”. Much of the current intervention work has to do with helping people function at the top of their range.

Your comment made me curious as to what the research defined as “sex”, and whether or not the psychological benefits were strictly physiological in origin.

This is from a footnote in the linked PDF:

“In Kahneman, Krueger, Schkade, Schwarz and Stone (2003) Measuring the quality of life, the authors found that among a sample of 1000 employed women that sex was rated retrospectively as the activity
that produces the largest amount of happiness. Commuting turns out to be the least pleasurable activity. Also Blanchflower and Oswald (2004) Money, Sex and Happiness, find that sexual activity enters strongly into happiness equations.”

I was unable to find the to find the full text of the original paper, so it remains an open question. If anyone knows where to find the full text of “Kahneman, Krueger, Schkade, Schwarz and Stone (2003) Measuring the quality of life”, that would be an interesting read.

The wording of the “Blanchflower and Oswald (2004)” research as “Sexual Activity” suggests a more strict definition of sex, though the citation is rather vague as to the paper’s findings.

Response to Red (comment #62). The Kahneman study is frequently cited. I have a follow-up study from Kahneman and Krueger (2006) that uses the term “intimate realtions” rather than “sex”. These terms have been used interchangably. Also, the number of women who reported sexual activity out of the 1,000 in the survey was around 12%, while the number of cummuters was around 68%. Not exactly apples to apples.

I love the idea of sex being the thing people enjoy the most and commuting the thing they enjoy the least. I don’t know why, but something about it tickles my gut.

I just got back from a 20-mile ride into downtown Portland and back just for kicks. It took me 80 minutes. The equivalent drive would take me 40 minutes, plus time to find parking. I’m a firm believer that if people would do something with their commute other than just commute, it wouldn’t be so bad. Biking is one option. When I worked at the box factory, I would listen to books-on-tape during every 30 minute leg.

Who wouldn’t rather have sex than commute! Here in Sacramento the 30 year plan to double public transit use will only mean a jump from 2% to 4% in ridership. Now add some light rail trains with individual compartments and beds and a year from now the survey will show sex and commuting to be equally pleasurable.

#50 Aaron said: “Winning the lottery may not make you happy, but in most cases it would not be an obstacle to being happy. Losing the use of one’s legs sucks. The quote JD uses makes light of the suffering of those who have become paraplegics.”

Aaron, I think you assume too much. I do not claim to understand the perspective of paraplegics, not ever having been one myself, but the concept there is not “Being a paraplegic is great” – the concept is, happiness is not necessarily related to physical health. As a doctor, I see this all the time, and it is a wonderful thing. Why do you think that paraplegics measure just as highly on a happiness survey as lottery winners? I would suspect it is because they have decided that feeling sorry for themselves is not a fruitful exercise, and their experience of losing their legs has made them realize that other things in life are more important than having legs. In other words, they have learned great lessons regarding gratitude.

For more on this topic, see Randy Pausch’s last lecture. Is Randy Pausch unhappy because he is dying of cancer? No, I suspect Randy Pausch’s happiness scale when he gave his last lecture was on par with the lottery winners. Does this mean that having pancreatic cancer is “good”, or that I would make light of the suffering of people with pancreatic cancer? Not at all.

Try asking a parent of a special needs child about this idea and I think you will find the same answers. I have yet to meet the family of a severely handicapped person who would deny that their experience in that family has made them less joyful or grateful. And yet, I am sure that they also would agree that severe disabilities, in your words, “suck.”

The point is that although on the surface you would classify certain life events as being “good” or “bad”, that classification does not correlate with their effect on your happiness.

JD: love the post. I will share this.
#66 Jason: you made me laugh out loud.

Another “Money and Happiness” paper of some interest was recently published by Lara Aknin, Elizabeth Dunn and Michael I Norton, showing that while having money has very little effect on happiness, how you spend it can have an effect. They found that spending money on others increased happiness relative to spending it on yourself – interesting stuff!

I thoroughly enjoyed the post and couldn’t agree more. I was particularly intrigued by #10 – “Embrace Routine”. I find that to be so true. If my world is constantly in flux and I am bombarded with decisions to make, it becomes taxing and frustrating. Not only that but I believe as humans we are a product of the habits that we create. I believe Aristotle said it best with:

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Great stuff, JD! Long time no see–I’m still reading but don’t have much chance to participate of late.

I couldn’t help but notice that all the illustrations you chose for this article were of little kids. It’s true; kids can be incredibly exuberant and fun; they feel their happiness so completely and that rubs off!

Having your own is an awful lot of work and not a little costly, but boy howdy, what a way to foster close relationships. Even for people who don’t want to “grow their own”, there are so many ways to get involved with kids and make a positive impact on their lives, and so the future of the world.

I was intrigued by all this happiness talk until I hit “Have sex”. Um, what about those of us who don’t have partners and therefore aren’t able to have partnered sex? Many of these “happiness” bullet points seem to be geared to bored middle class folks who already have achieved a level of comfort and have their basic needs met. These happiness things do not address how those of us who don’t have jobs, partners or even enough money to keep a roof over our heads are suppose to go about being “happy”. I am grateful for what I do have, but believe me it’s not much and not quite as hard as say the bored housewife with two cars, kids, a hubby and a house.

Kudos. One of the best written, best researched blog posts I’ve read – anywhere. The Gilbert video was fascinating and entertaining, as well. Finally, your 13 points are all solid. Wonderfully done; thank you.

Regarding the “set point” versus “set range,” I think the distinction is a petty one and doesn’t diminish the value of the premise that approximately 40% of one’s happiness quotient is subject to our own control via decisions and choices we make consciously.
Personal example: I know that my husband and I are happiest when we are doing something together. Important: it doesn’t matter in the least *what* we are doing. Walking on the beach, going to a movie, driving through a new neighborhood and kibitzing about people’s landscaping … it’s the time spent together that does the trick. So if one of us is feeling low, I find a way to add more mutual activity to our schedule.

I’m happy due to great health, family, and the $400,000 cash I have in the bank. Living in a nice house, and having a vacation property in Tahoe also makes me happy, even though the value has gone down.

Having wealth while seeing so many others struggling is definitely a source of unhappiness for me. However,it is also a source of happiness because it provides the opportunity to directly help others in their misfortune. The rewards of giving to another without any expectations or conditions is a sure formula for happiness and that giving doesn’t always have to be in the form of money. Wealth is also relative, for you can always find someone more needy than yourself.
Happy giving.

Happiness means fully living life. Being in the now. Experiencing that what’s around you.

Dwelling on the past and planning isn’t living. Only experiencing is living. While it’s good to reflect on experiences and plan a direction, it should be done just enough to better the present.

Then, get back to living. THAT’S what brings you happiness.

And I agree that money itself isn’t happiness. Money isn’t the end but a means to an end. A tool to improve life, rather than life itself. How can a piece of currency bring happiness? It doesn’t feel particularly good against the skin, isn’t tasty, and a pretty boring play mate

Awesome list for maximizing happiness, a great reminder to focus on what’s important to you in life.

Having enough for some comforts in life help make me happy. I’ve been broke and remembering hoping my car wouldn’t break down. Now I can handle that a little better. But true happiness comes from within. I know several people making upper 6 figure salaries and they are the most miserable people I have met. I’m happy for my families health and mine. With that I/we can do anything

Good hello JD,
I definitely agree with point 6 about creating goals. I had pretty much just wandered aimlessly when I moved out to Calgary, sitting at home doing nothing. For whatever reason, I decided to make a bucket list, and I quickly realized that there was tons of things that I actually /wanted/ to do, and that most of the items were pretty easy to do. Since then, I’ve gotten out of the house a whole lot more

This is a great post. Happiness is so very elusive. Many a times when we step on the hedonic treadmill in the hope of becoming that a little happier, we find that long term happiness does not materialize. What gets satisfied then, is simply a material craving albeit temporarily.

This is realy helpful and meaningful , but in my case , first i’m a 19yrs high school senior , and this year is so far the hardest , and i dont mean with my school exams or something , but socialy , right now i’m practicly without friends or a girlfriend (i’m good looking) , so i’m allways at home alone ,bu it wasn’t like this few years ago , i dont think i treat people badly , i’m nice and polite , so i realy dont know how i end up like this , and this is my source of stress and unhapiness !!

Hang in there Alex. I wish I could tell you that relationships are not important for happiness, but they are. Positive psychology research has repeatedly shown that intimate relationships are highly correlated with happiness.

I was in the same position you are when I was a senior in high school. It sucked! College was the big turning point for me. It was a time when I developed my strongest, longest-lasting relationships outside of my family. If you are planning to go to college, just wait and relationships will happen. If you are not, you may want to consider changing your plans and attending college. My personal belief is that there is no cost that is too high for attending a good college. Good luck!

Happiness is a state of mind. No outside influences can affect it unless you allow it to. Some people don’t allow anything to improve their happiness (money, love, etc). You could be living in a cave eating cockroaches and be happy (maybe a little insane as well).

My happiness comes from looking at my finances and not having any debt and looking at my brokerage and finding net capital gains and no capital losses. When I do find a woman that shares my values and interests, my priorities might change. Until then I’m loving my financial and personal freedom.

One of the most interesting things I have found is that there is a certain point, as far as wealth goes, to where an increase in wealth does not make you happier. Once you are financially secure, money does not change one’s happiness in the least bit.

I strayed into this gold mine very recently. Money does not make us happy…. it is the pursuit which gives us a lot of strong emotions and happiness is one of them. Being happy which is just an emotional state and can be manipulated should not be our goal.

Well its true that money is not everything. Having lots of money will not make one happy.Because they say that money is the source of evil. Sometimes it controls your life without you knowing it. When one doesn’t have money you only dream of having just enough to survive. But once you get the chance to get what you dreamed of you ask for more. Happiness is in the mind of the person, one just have to allow it to happen.

Hey JD,
I know this is an old post but I really enjoyed your take on it. I constantly struggle with the ideas of being content with what we have, and of not comparing ourselves to others. It’s often difficult, and for me in particular, having just graduated from college and seeing friends who are off working jobs that pay them twice as much is difficult at times. I think the root of it for me is being able to have money to the point where it allows me some freedom to work for myself and set my own schedule. It’s a constant work in progress for sure though.

This is really GREAT stuff and Thank You for your 13 Steps. I think taking action is the most important step to living a better life. You will never get across the street to take what is on the other side if you don’t step off the curb. If you never take that step you will only watch everyone else go by. There is no question that is usually the hardest step to take, but the one that comes with the most reward. All of the items on your list are meaningless if we never take ACTION.
Remember, truly successful people happen to things; they don’t allow things to happen to them.
Thanks Again for the Inspiration.

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